Nov. 27 (Bloomberg) — Rubber slumped by the most in more than two months as investors reduced holdings of risk assets after global equities tumbled amid concern over losses stemming from Dubai World’s attempt to reschedule its debt.

Futures in Tokyo fell as much as 5.3 percent, the largest daily loss since Sept. 14. The MSCI Asia Pacific Index slid 3 percent to 113.99 as of 4:22 p.m. in Tokyo, the biggest drop since Aug. 17, while Japan’s currency surged to a 14-year high against the dollar on haven buying by investors. Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayment on much of its debt.

“Rubber was sold in tandem with other commodities and stocks as news about Dubai debt spurred investors to flight from riskier assets,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

Rubber for May delivery, the most-active contract, fell as much as 13.4 yen to 239.7 yen per kilogram ($2,792 a metric ton) on the Tokyo Commodity Exchange before settling at 241.2 yen. Prices fell 0.9 percent this week, the first loss in three weeks.

Dubai, which borrowed $80 billion in a four-year construction boom to transform its economy into a regional tourism and financial hub, suffered the world’s steepest property slump in the worst global recession since World War II.

“If Dubai has to default, that could start a wave of defaults in other areas,” Mark Mobius, Chairman of Templeton Asset Management Ltd. said in an interview on Bloomberg Television from Hanoi. “This may be the trigger to allow for the market to take a rest and pull back.”

Supply Concern

Rubber futures retreated after reaching the highest level in 14 months yesterday amid concern supply from Thailand, the world’s largest producer and exporter, will drop after heavy rain cut output in the nation’s biggest-producing area.

Thai exporters offered so-called RSS-3 grade rubber for December shipment at $2.64 a kilogram today, compared with $2.65 yesterday and $2.55 a week earlier, Shigemoto said.

“Investor focus shifted away from tight market fundamentals to the financial market turmoil,” he said.

Thailand, Indonesia and Malaysia, the world’s biggest rubber producers, ended curbs on exports as the global economic recovery stokes demand and prices of the commodity used in tires and gloves, Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium Ltd., said today. The decision was made last week at a meeting of the International Tripartite Rubber Council, he said.

“News on the termination of export curbs partly drove the rubber price,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.

Thailand, Indonesia and Malaysia, which harvest about 7 million tons a year, pared exports by 690,000 tons in the January-July period, approaching the 700,000 ton target set in December to combat a 56 percent slump in prices last year.

“We had the program to improve the price and we’ve met our objective,” Abdul Rasip said in a phone interview.

Rubber for March delivery on the Shanghai Futures Exchange lost 2.7 percent to settle at 21,545 yuan ($3,155) a ton.

Source: Bloomberg

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